Paraguay has become increasingly popular in recent years, and more and more people, especially from Central European countries, are emigrating to Paraguay. One reason for this is the low taxes and the attractive tax system in Paraguay.
Yet how low are the taxes really and what do expats have to pay? This comprehensive tax guide outlines all taxes in Paraguay and explains the tax advantages.
Key points at a glance
Paraguay has a territorial tax system and does not tax foreign income. Anyone who generates dividends, rental income, or capital gains from abroad generally does not pay taxes on them.
Domestic income is taxed at a low rate, with up to 10 % in income tax (maximum rate) and 10 % on corporate profits.
Below is an overview of the most important taxes in Paraguay, including special regulations.
Like many other countries, Paraguay has a progressive income tax system for individuals. Below is a breakdown of the progressive tax rates by annual income.
up to about $7,500 USD: 8 %
up to about $7,500 USD to $22,500 USD: 9 %
about $22,500 USD: 10 %
Corporate income tax is levied on corporate profits and is 10 %.
Example: With a company profit of 100,000 USD in Paraguay, 10,000 USD in taxes are incurred.
Dividends from companies in Paraguay are taxed in two ways. If the shareholder lives in Paraguay, the tax rate is 8 %. If the shareholder lives abroad, the tax rate on the distribution is 15 %.
The total tax burden on domestic profits and distributions to domestic shareholders is therefore 17.2 %.
Example: $100,000 profit – $10,000 corporate income tax (10 %) = $90,000.
90,000 USD – 7,200 USD in dividend tax (8 %) equals 82,800 USD, which is credited to the shareholder's account.
In the case of distributions or dividends from companies outside Paraguay, taxation is completely waived due to the territorial taxation principle and is therefore 0 %.
Basically, capital gains from stocks, ETFs, interest, and derivatives are tax-free, provided they originate abroad. In practice, this applies to most capital gains.
Domestic income is taxed at a rate of 8 % if the recipient resides in Paraguay, as is also the case with dividend tax.
However, one should be careful with day trading, as it can be classified as active income and thus fall under income tax regulations.
Currently, there is no taxation on cryptocurrencies or digital assets like NFTs in Paraguay. Only a heavily criticized reporting requirement for transaction amounts starting at 5,000 USD in 2026 was introduced.
Unlike Germany and other European countries such as Switzerland or Spain, there are no taxes on gifts, inheritance, or wealth. This makes it particularly attractive for wealthy individuals of all kinds.
The following tax calculator for Paraguay serves to easily calculate taxes in Paraguay for expats.
Global Setup · Paraguay
Estimate your tax burden as a tax resident in Paraguay - according to the territoriality principle and current Paraguayan tax laws (Law 6380/19).
IRP-RSP: tax-free up to 80 million ₲ in gross annual income; above that, progressive rates of 8% (up to 50 million), 9% (50–150 million), 10% (over 150 million). Tax-exempt allowances and deductions are not taken into account here.
IRE: 10% on Paraguayan corporate profits. In the event of a distribution, IDU also applies (see below). Retained/capitalized earnings do not trigger IDU.
Local dividends: IDU 8% (Resident). Foreign dividends are tax-exempt for individuals under the territorial principle (0%).
Crypto gains on foreign exchanges are considered foreign income (0%). Note: Resolution 47/2026 requires reporting for amounts of ~5,000 USD/year or more (no tax).
IRP-RGC: Paraguayan capital gains 8% flat. Gains from foreign assets are territorially tax-exempt (0%).
Effective tax rate
Note: Non-binding estimate based on current Paraguayan tax laws (Law 6380/19, as of 2026). Territorial principle: Foreign income (foreign services, dividends, cryptocurrency, capital gains) is tax-exempt for individuals with 0%. IRP-RSP progressive 8/9/10% (tax-free up to 80 million ₲ gross); investment income 8%; IRE 10% (Simple ~3%); IDU 8% local; IPS ~9%. Tax-exempt amounts/deductions, IVA (10%), and special cases (e.g., nexus risk when providing services from Paraguay) are not included. Currency conversion using reference rates of ~6,586 ₲/USD and ~7,100 ₲/EUR. This calculation replaces no individual tax advice. For a binding assessment, please book a consultation.
An overview of the most frequently asked questions about taxes in Paraguay.
In a sense, Paraguay can be called a tax haven, because under certain circumstances, as an expat with foreign income, you are largely tax-exempt.
This is a classic mistake that many entrepreneurs make. They try to evade local taxes through an offshore company or believe that a US LLC represents foreign income and is therefore tax-free. However, this is not the case, because if the US LLC is actually managed from Paraguay, the tax residency is also in Paraguay. Accordingly, local tax laws must be applied.
Paraguay offers an attractive tax system and is popular with investors and online entrepreneurs for good reason. Foreign income is not taxed under the territorial taxation system and is therefore tax-free. Domestic income is taxed at a maximum rate of 10 % for individuals and a flat rate of 10 % for corporations. Capital gains, inheritances, and gifts are not taxed.
For over ten years, Clemens has been advising entrepreneurs, investors and families on international company formation, tax strategy and relocation of residency. His focus: legal, bank-compliant structures that hold up in practice, not just on paper.
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Clemens Kohlbacher
